Insource or Outsource the Data Centre?

Kenneth Johnstone, the recently hired CFO of a growing financial services organisation, has been at work for weeks developing several data centre return on investment (ROI) scenarios.

‘Managing a $300 million budget is not as simple as I thought it would be’, he thinks. He didn’t anticipate that the Board of Directors would be so focused on this issue. ‘So much is hinging on this “build vs. outsource” data centre decision’, he mutters to himself. He’s tense about tomorrow’s presentation to the board, but he is confident that he has made a compelling case in favour of ‘build’.

He rehearses his presentation one final time. ‘Outsourcing offers a good option, but we don’t want to lose the talent we already have in-house. Plus, managing the outsourcer is more of a resource drain than most people realise’. He knows the board is most interested in the financial aspect of the decision. ‘From a purely financial standpoint, outsourcing offers a compelling alternative. But . . . let’s consider what the numbers really mean and what the hidden cost might be’.

Noticing the time, Ken calls it a night and drives home to catch a few hours of sleep.

It’s the morning of the big day. Ken paces back and forth in the hallway. He’s presented to the board before, yet his stomach is in a bit of a flutter. Everyone is waiting for Liz, the Chairman of the Board. Wasting her time is a bad idea. As Ken enters the room, he brushes off his anxiety, and converts his tension into positive energy. After all, he’s prepared and he knows what he’s talking about.

Liz walks in, and after some brief, friendly banter, Ken begins to make the case for building out a new data centre. Some of the information he presented was derived from a Schneider Electric white paper that he downloaded for free from the web. The data he gathered demonstrates how building with scalable, modular, and standardised infrastructure lowers CAPEX and OPEX costs. The board is pleased to learn that over a 10-year lifetime, the total cost of ownership (TCO) of building a new data centre will save them 20% compared to outsourcing. At the end of the meeting, Ken receives positive nods and congratulatory handshakes.

CFOs like Ken have to consider how their business requirements may be unique and that the ‘one size fits all’ approach may not work for them. Schneider Electric thought leadership content can help companies make sound physical infrastructure investment decisions.

Disclaimer: Schneider Electric is a major supplier of physical infrastructure to colocation companies. We are not biased toward either owning or outsourcing data centres. Our white papers and other thought leadership are intended only to help you decide and make it as easy as possible for you to run your business and gain a competitive edge.